Newsflash: Machine Vision Camera-maker Thinks You Should Buy More Machine Vision Cameras!

This comes from Basler, who suggest it’s time to ditch Firewire/1394 for USB 3.0. A White Paper on their website sets out their reasoning, some of which makes sense and some of which I would question.

Four arguments are presented: 1394 hardware will disappear, Windows 8 doesn’t support it, the bandwidth is insufficient, and it will save you money.

The first two of these I agree with completely. Indeed, it’s been several years since I developed anything with Firewire, preferring to use GigE instead. So yes, new systems should not be developed with this outdated interface. But if the system is in-service and working well, why would you change?

The bandwidth argument makes no sense, and how will replacing cameras that still work save money?

Bottom line: if you’re developing applications with Firewire interfaces you’re building-in obsolescence. But if your old Firewire systems still perform the way you need, stay with them.

I suppose I should add one caveat: smart engineers will be looking ahead at how they would replace the old systems when they do fail.

Are good results from Basler bad news?

Camera-maker Basler is having a good year. With nine months gone revenue is running 17% above the same period in 2012, at €49.1m. Much of the growth is coming from Asia, which now accounts for over 40% of sales, although the quarterly report also speaks of market share gains in Europe and North America.

One of the numbers I like to watch is R&D spend, and that grew 8% to €6.7m. That’s a healthy number, although it represents a cut of 1% as a percentage of sales. Of course it takes time to ramp up R&D effort, so maybe we’ll see that change in 2014.

The problem is certainly not that management is recruitment-averse. Headcount is up 14% to 330, so they’ve certainly been bringing in more people. I suspect though that these are sales, production and distribution folks rather than the harder-to-find camera development boffins.

And that raises my final point for today. Is the machine vision industry going to reach a point where lack of skilled people constrains growth? The Basler numbers suggest to me that might be on the horizon.

Good results from Basler

It’s good to see German camera-maker Basler doing well. There was a period when their results were kind of flat, but that’s certainly not been the case in 2013. In fact, with sales up 28% to €32.2m at the half and earnings up 77% you could say business is booming. The only fly in the ointment would seem to be the cash flow, down 30%. But as that probably stems from the sales growth I doubt it’s really a problem (in my unqualified opinion anyway.)

As for why business is so good, well Basler management points to three factors: strong demand for GigE cameras, growth in Asia, and a pruning of end-of-life models. I’d suggest there’s a fourth factor at work too. Now they’ve got out of the “Solutions” business they’re able to focus just on making cameras.

There were a couple of other points in the reports that I’d like to share. R&D spend was up 7%, but actually fell as a percentage of sales. I can understand a reluctance to twist the R&D tap based on just six months of sales, but assuming the volume of business remains stable, or even continues to grow, I would hope to see more R&D investment in 2014.

And second, a comment I found interesting was, “… we see our expectations confirmed predicting that GigE Vision and USB3 Vision will be the dominant interface technologies for industrial cameras in the years to come.”

I would agree that GigE has clearly become the default choice and has left FireWire for dead, but USB3? Personally, I think the jury is still out. I’m not even sure if there’s room for two “mainstream” interfaces. Isn’t that just going to create additional complexity and cost?

But leaving that debate for another time, it’s good to see Basler looking healthy. It bodes well for our industry.

CMOS and GigE

I’ve been reading about Basler’s racer linescan cameras. They’re pretty interesting. I hadn’t appreciated that they are both CMOS-based and GigeE. That’s a combination that yields some interesting benefits: less heat generated and no high-end framegrabber or expensive CameraLink cable required.

And where did I learn this? From “The Benefits of Modern CMOS Sensors in Industrial Line Scan Cameras”, available as a pdf download from Basler’s Document Downloads page. (Name and email required, but it is worth it.)

Now obviously, Basler’s White Paper isn’t exactly impartial, but it is well-written and filled with technical “meat”, so I suggest you take a look.

First quarter 2013 results from Teledyne

Teledyne is the parent of Canadian camera-maker Dalsa, and having last week commented on German competitor Basler’s results it seems only right to do the same for the Canadians.

Unfortunately Teledyne publish far less data than do Basler, but I can share the big numbers: the Digital Imaging segment (Dalsa plus a few other bits,) saw sales increase 8.7% to $102.4M and profit jump 20.9% to $5.2M.

That profit number concerns me, for two diametrically opposite reasons. First, it’s not really a very good margin. Basler seems to have higher margins, although in fairness, I find it very hard to extract the actual numbers from their report. But second, how did they achieve such a jump? Has there been some cost-cutting? Perhaps becoming part of a bigger business meant some overhead could be moved up to head office. I hope it’s that rather than someone taking the knife to R&D.

Time, (and the 2013 final report,) will tell.

2013 looks good so far

If you’re sitting in Basler’s offices in Ahrensburg, Germany 2013 is shaping up to be a good year. Of course, none of us have crystal balls, but the First Quarter numbers look healthy.

Revenue is up 23% over the same period in 2012, to €15.1M, (well on the way to the annual goal of €100M,) gross margin grew six percentage points, to 50.3%, and “Gross results” (profit?) is stated as €7.6M, up 41%.

Other notable numbers were: headcount up 7% or 21 full-time equivalents, and R&D spend up 10% to €2.2M. And this is where I’ll start to get picky.

Annual R&D spend looks to be south of €10M. Is that enough? Well look at this way: AVT and their parent, Augusta, are seeing much growth, both acquisition-fueled and organic. Dalsa, now part of Teledyne, have substantial financial backing. But Basler soldier on, independent.

I don’t think there are any absolute rules for R&D spend, but I’d note that the percentage grew less than both revenue and profit. I’ll accept that one good quarter is not a reason to let rip, but if we don’t see a ramping-up throughout 2013 I’ll start to wonder how the long-term future looks.

Basler’s 2012 results

There are two dominant camera makers in Germany. Allied Vision Technology, (AVT,) which acts like the brash young upstart, and Basler, who I’d characterize as the cautious and methodical wise old man. I reported on AVT’s 2012 results back on March 20^th, (“Machine vision financials”) and now we have those from Basler.

I’m not going to weigh one against the other, but you might be interested in my take on some of the details.

First the overview: revenue (sales) and income (profit) were pretty much unchanged from 2011. What did change though were headcount (up by 23,) and R&D spend, up nearly 17% to €8.3m, or 14.8% of revenue. Those extra heads probably went in to several areas, but I’m guessing the majority found their way into R&D.

What did they find to do there? Well German financial reports are models of transparency, so Basler tell us. The big development efforts in 2012 were: adding USB3 to the ace camera family, creating a high speed ace, and working on the racer linescan camera.

The ace is positioned at the intersection of what Basler consider the low-end and mainstream markets where the average selling prices are €250 and €500 respectively. It would seem then that the ace is expected to be their bread and butter for the next few years, contributing the lion’s share to revenue and income.

A couple of other points to share. First, the results for the “Solutions” business are no longer separated out. Instead, there are several comments about how Basler will be purely a camera-maker. So I guess if anyone was interested in their seal inspection business, this would be a good time to signal your interest.

Second, the year end market capitalization was around €45m. That strikes me as low for a profitable, cash-generating business with annual revenues of €55m. Maybe it’s because the Basler family still retains majority control, and maybe it’s also why there’s bullish talk of growing 10% in 2013, even though overall economic growth is pegged at a more modest 2 – 3%.

I’m no stock analyst, but I’m thinking Basler warrants a cautious “Buy”. How ‘bout you?

Who over-engineers their cameras?

There seem to be two schools of thought when it comes to the design and development of new products. One group argues that providing anything more than the minimum needed to meet customer expectations is waste. The opposing view seems to be that the customer should be delighted by all sorts of features he didn’t realize he was getting. Of course, the latter will result in more expensive products, but if customers love them maybe loyalty is higher.

Basler though seem to be opting for the former, minimalist, approach, at least if this movie about their ace camera is any indication.
 

 

Watch closely and you’ll see a little tag line saying “no over-engineering.” I’m curious about this. It sounds as though they’re having a dig at a competitor, but who? When I run through my mental list of camera manufacturers I don’t match any to the phrase “over-engineered.” Whoever can they mean?

How to invest in machine vision

If you read “Analyzing the global machine vision business” you’ll know machine vision has excellent growth potential. Today let’s talk briefly about how to seize this opportunity.

I know of only three pure machine vision companies that are publicly quoted, Cognex in the US and Basler and Augusta in Germany. (Augusta is the parent of camera-maker AVT and is pretty much just in to cameras.) If you’re interested in other vision companies you’ll need to investigate their parentage.

For example, Dalsa is part of Teledyne, a far bigger data acquisition company. Likewise, PPT is owned by Datalogix, and Microscan by Spectris. Then there are the sensor companies like SICK and Keyence, which I’m not sure how you’d get into. Investing in any of these means exposing yourself to risk beyond the pure machine vision industry, (which may or may not be a good thing.)

Many other vision companies – probably the majority - like MVTec (Halcon software vendor,) are privately held. If you want a piece of their action you’ll need to talk with the existing owners. Good luck with that!

So are there any other options? Well I think you’re left with starting your own machine vision business, developing some innovative technology, and selling out to one of the big vendors. But here’s a question to my community of readers: are there any private equity or venture capital businesses specializing in machine vision?

Camera sales going well

German camera-maker Basler published their third quarter results today, the 6^th, and they look surprisingly good. Well they surprised me. Previous quarters haven’t look too rosy, and with all the talk of a downturn in Europe, plus comments from Cognex to the effect that Q3 is never great, I was expecting a dip in both revenues and income.

To my surprise, I was wrong. (Well it had to happen sometime I suppose.) Comparing the first nine months of 2012 with the same period in ’11, things don’t look so great. Revenue was up just 1% while income (profit, to my British readers,) was down 15% to €14m. But compare Q3 and you see a very different picture with both revenue and income up 26% to €16.6m and €2.4m respectively.

What are we to make of this, dear reader?

Well there are some new products – the runner, pilot and ace all debuted relatively recently – but also, Basler has a strong and growing presence in the traffic marketplace. Basler then, seem to be building momentum, and I think this tells us that machine vision continues to be a technology whose benefits outweigh costs. Thus, even when belts need to be tightened, advanced cameras are still in demand.

Good news for all of us I think.

Compare and contrast

It's financial reporting season and I've just see some interesting results from AVT parent Augusta Technologie. You can click the link for the full report; I'm just going to highlight two points.

First, they're doing really rather well. First half 2012 sales are up 10% over the same period in 2011 and profit is up 50%. Second, they're projecting growth of 9% for the next couple of years.

Now compare that with the results from Basler. Admittedly, their decline was due to the under-performing, (some might say non-performing,) Solutions division, but putting that aside, their camera business wasn't showing any growth.

What's the difference between the two companies? Well Basler make great cameras, some might argue that they are higher quality than those from AVT, but they tend to be more expensive. And also, AVT and sister company LMI seem to promote themselves more aggressively. A third point to mention is that AVT has a much wider range of cameras. Presumably this helps them capture more niche business, although I've always seen variety as adding cost and complexity.

So what does the future hold? The big news is that Augusta is becoming part of TKH Group NV. TKH is a big organization with deep pockets, so I imagine AVT and LMI will continue their aggressive growth. If they hold it to 9% there will be room for Basler, but frankly, I fear for Basler's market share over the next couple of years.

Basler half-year results a surprise?

A 10% drop in revenue for the first half of '12 was a bit of a shocker. Digging deeper into the report shows where the problem lies: The Solutions business has all but vanished. The first half of 2012 saw revenues of just €1.6m ($1.99m) versus €4.9m ($6.08m) for the same period in 2011.

According to the financial report, this dip stems from a lack of business in the LCD inspection market. Most of the sales came from spare parts.

And yet … Basler grew headcount by 20 people, so what are they doing?

Well I suppose they could be out trying to drum up more Solutions business, and indeed, they do project an uptick in the second half. However, the interesting comments relate to camera sales. The ace range is reported to be selling well, especially those with CMOS sensors, and the racer linescan family is just entering production, so that ought to generate new business.

The other point of interest concerned network cameras (the kind that are used for security and traffic applications.) Here Basler states that, “we will be able to record growth in sales in the high double-digit percentage range in this market segment in 2012.”

A bold projection, yet given the way those markets are expanding, I suspect it will turn out to be reasonably accurate too. I suppose we'll have to check back early in 2013 to find out.

Setting the F-Stop

Lenses are not designed to be user-friendly. Look at the two rings and you’ll see a bunch of numbers, one set indicating the focus the other the aperture openings. These latter numbers go up in powers of two, basically 2.1, 4, 8, 16, and they indicate how much light can pass through. A bigger number means the hole is smaller and less light gets through. Photographers call this the F-stop, and it’s usually written as f/#, so you get f/2.1, f/4 and so on.

So what’s the right setting for your application?

There’s the problem. No one will tell you, but a little reading of the Basler White Paper “Optics Recommendation,” (get it from their download site,) offered this nugget of information:

“Best image results will appear with F/# = 4, 5.6, 8”

Well the term “Best image” is somewhat ambiguous, so I set up a little trial.

Using a 5Mp monochrome camera and a 35mm Tamron lens, I captured four images of the same scene, at f/2.1, f/4, f/8, and f/16. Closing the aperture reduces the quantity of light reaching the camera, and it seemed important to have the same gray levels in every image, so I compensated by increasing the exposure time.

I decided to quantify each image by taking a single line and measuring the contrast range. Not unlike a MTF/line pair type of calculation, I figured the “best” image would be the one with the greatest contrast.

Here’s the image I worked with (note that I’ve just snipped a small region from the much larger original.)

And here’s the graph showing gray levels along the green line.

 

And here’s what I observed, plotting contrast (defined as max gray – min,) against f/#:

Just as Basler said, the contrast was best between f/4 and f/8. So that will be my start point from now on.

Camera mounting problems solved?

Everyone talks about the importance of lighting and the need for high quality optics, but I find one of the biggest challenges in integration – okay, not the biggest, but it’s it a real PITA – is just getting the camera and lights lined up with the object to be inspected. Unfortunately it’s not as simple as just bolting the camera to a bracket.

First, the camera needs to be in a fixed orientation relative to the target – usually perpendicular, but not always – and then the actual sensor inside the camera is never perfectly aligned with the mounting holes in the camera body. In fact if the various standards bodies want to make themselves useful they could do worse than defining some rules governing the relationship of sensor position to mounting holes. But that’s not what I wanted to share with you today.

I was browsing through a case study from Basler – “Label Inspection with Basler sprint Camera Link Cameras” (it’s a pdf document,) when I spotted the interesting mounts used for the linescan cameras. These appear to be simple kinematic mounts that not only hold the camera in place, but allow for precise adjustment of angle just by turning a screw. Better still, there’s plenty of room for air to flow through the cooling fins, although – note to Basler – it would make more sense if the fins were aligned vertically rather than horizontally.

But that detail aside, I’m rather taken with these mounts. Does anyone know if they are available off-the-shelf, or were they custom-made for this particular project?

Basler financials for 2011

German camera-maker Basler published their 2011 results at the end of March. I didn’t spot any surprises in the lengthy report, although it’s interesting to see how they see the machine vision industry changing in the years ahead.

But before talking about the future, a quick recap of the past: Revenues for 2011 were up 8% to €55.1m ($72m) and while EBITDA was down slightly, cash flow improved, showing that management seems to have a grip of the fundamentals. Employee numbers and R&D spending also grew slightly, although the latter remains fixed at 12.9% of revenue.

But as I’m not a stockholder I’m more interested in the trends Basler sees in machine vision. In the meaty annual report they look at the camera market in two ways – split into high, mid and low-end segments, and by end application.

Noting that volumes of high-end cameras, (defined as those costing more than €1,500 each (around $2,000),) will remain low, Basler envisage future growth coming from the mid and low-end of the market.

I say that’s all very well, but I suspect margins are tighter on those products. If Basler wants to prosper they need to look at maximizing manufacturing efficiencies.

In terms of end application, factory applications are currently the single biggest market. Basler seems to expect that market to be relatively static but expects growth in the surveillance, medical and traffic areas. Regular readers of this blog will know that for many months I’ve been pointing to the first and third of these as where the action will be in the years ahead. Medical I didn’t see as such a growth area, so that’s an interesting point to note. I suppose though it depends on how one defines “medical”. If pharma falls under that heading it’s less surprising.

The bottom line: a solid set of results and a cautiously optimistic outlook for 2012. Nothing wrong with that.

The Basler approach to product naming

Britain’s Jeremy Clarkson recently described the MacLaren MP4-12C supercar as sharing its name with a photocopier, and his audience got the joke immediately. Sexy products like supercars should have sexy names: which would you prefer: Aventador or MP4-12C?

I think this also applies to more mundane products like machine vision cameras. “MQ022MG-CM” is an engineering designation that may do a great job of describing the product, but it’s unlikely to lodge in anyone’s cerebellum.

Basler seems to get this, which is why they name their cameras, using words such as Ace, Pilot, and now “racer”. AVT get it too, basing their naming strategy on fish – Pike, Marlin, Guppy and so on. These are all product names that will stick in the mind: when I’m asked to suggest a camera I may not recall the MQ0-12C or whatever it is but I will remember “Stingray” or “Racer”.

The “racer” is an interesting new product. Described as “cost-effective” (which I imagine means “cheaper”,) this is the start on a new linescan family. It’s built around a CMOS sensor and is available with either Power-over-CameraLink or GigE interfaces. The latter of course saves a few hundred bucks on a framegrabber, though whether that’s negated by a price premium over the PoCL version I couldn’t say.

What I will say though is that I’m likely to remember the Racer next time I’m asked to suggest a camera while I doubt the DLC-2048-48-CL (yes, I made that up,) will spring as readily to mind.

USB3 fit for machine vision?

USB cameras have never really been adopted for machine vision. Yes there are some products on the market – Lumenera seems to be leading the pack – but they’ve failed to break through. As I understand it, this is mainly due to the way USB tends to hog more CPU time than does FireWire or GigE, and because it’s difficult to have more than a single camera per PC.

Things seem different with USB3. This interface seems to be building a head of steam with vendors such as Point Grey, Ximea, and Basler all launching USB3 cameras.

What does that mean for we end-users? I think it means life just got a little more complicated. There I was, getting to grips with GigE, learning how to address the cameras (not as easy as the vendors would have you believe,) and now they expect me to try something else. And what does USB3 give that GigE doesn’t?

I’m not sure I know. Speeds are broadly comparable and cable lengths are plenty long enough for my industrial needs. One difference might be that USB3 supplies power, so I can save on a separate power supply. Yes, I could go PoE but that doesn’t really seem to have broken through, so camera choices are limited.

I don’t know about you, but I think I’ll hang back and watch how this all pans out.

Financial review

Today it’s the turn of Basler under the financial spotlight. Let’s see what we can deduce from their Q3 2011 results, published November 10^th.

In the commentary there’s a lot of talk comparing the first three quarters of 2011 with the same period in ’10. That’s hardly surprising because those numbers look good: revenues, gross margin, earnings per share, cash flow all improved. But third quarter comparisons don’t look quite so attractive: Revenues down 16%, earnings per share down 13%. Cash flow however was very strong, up 81%.

So what’s behind these numbers? Allow me to make three observations:

• Headcount is up somewhere around 10%. At the same time, R&D and administration costs have increased.
• The Solutions business seems to be struggling. Costs have been cut to match the decline in revenues but I have to wonder how much longer Basler want to be in this business.
• Surveillance cameras are a bright spot, sales having doubled from Q3 2010.

What does this mean for the machine vision industry as a whole?

Clearly, it’s hard to make money in solutions. Selling hardware seems more lucrative. Also, it’s a competitive, product-led industry, hence the need to pump more resources into R&D.

And is there an industry-wide downturn? Basler say there has been a “cyclical downturn.” I’m not convinced though. I don’t recall the Cognex numbers suggesting a dip. I didn’t get to Vision 2011 this year but I’m curious what the mood was. Any readers care to comment?

Advice on lens selection

If I was to categorize the machine vision questions I get, number two on the lens would be optics. Every camera system needs a lens, but lens nomenclature makes no sense to the typical vision user. In an effort to help, periodically I direct readers to the best lens calculator package I know of – MachVis, buried deep on the Qioptiq website – but sometimes that’s not enough. What’s needed is a simple optics primer.

It seems the folks at Basler have reached the same conclusion, because they’ve recently put a two page white paper titled “Optics Recommendation” on their website. It’s not the definitive guide, but it might help you on your way.

And what do I get most questions about? That would be lighting.

Multi-sensor inspection application

From the Basler “Success Stories” files comes “Ultrasound Diagnostic Railway Car with Basler scout GigE Cameras for Synchronized Visual Inspection “ (it open up as pdf.) This describes a system where ultrasound is used to detect cracks in rails. What makes it challenging is not so much that this is done at speeds of 60km/h, and in all conditions, but that rails actually have holes in places. This means the ultrasound system is going to give indications of flaws when none are present.

To deal with this, a camera system, synchronized with the ultrasound, captures images of the rails. This makes it possible to review a suspect area of track and decide if further investigation is needed. Obviously, it’s more complicated than how I’ve just described things, so if you’re interested, take a look at the note on the Basler website.